Another strong IPO for SaaS investors, as open-source searc…

Shares in Elastic, a software-as-a-service company that helps other companies find, sort, and analyze their internal data, soared Friday in their debut on the New York Stock Exchange.

Elastic’s stock opened at $70, nearly double the original asking price of $36 a share, and held that ground throughout the trading day, closing at $70.50. That values the company around $4.9 billion, and comes on an otherwise down day for the stock market.

“It is a bit of a surprise,” acknowledged Shay Banon, chairman and CEO of Elastic, in an interview with GeekWire. “We did come back from the road show with a good feeling with investors, our story resonated with them,” he said, but Elastic decided to price at $36 to preserve what Banon called a “sane” valuation multiple.

Shay Banon, CEO and chairman, Elastic (Elastic Photo)

Elastic is a classic open-source enterprise computing business, developing commercial products and services around an open-source project called Elasticsearch that was originally developed by Banon. Elastic’s software allows customers like Uber, Walgreens, and Tinder to run queries on their data and organize the results in a way that can help those companies discover ways to personalize their products or services around their customers.

It started off as a free service, and then Elastic built additional features around the project that developers can pay to use as their use of the search engine grows. The company has also added products that use the basic search capabilities to help infrastructure administrators monitor logs across their servers, and that help security professionals search for malware or intrusions in their networks using log data.

Like many other open-source enterprise software companies, Elastic both partners and competes with Amazon Web Services. Elastic customers can run the software alongside their cloud investments on AWS (as well as other clouds), but AWS offers its own managed Elasticsearch service built around the open-source project.

“I feel very good about our ability to differentiate ourself from AWS (and other cloud providers),” Banon said. There certainly are developers that don’t mind working with the basic Elasticsearch service that is offered by cloud companies, but he believes companies that like the product but can’t or won’t spend a ton of time and money making it work in their environment will be happy to pay Elastic for those services.

Several SaaS companies have enjoyed strong IPOs this year, including local companies like Avalara and Smartsheet, as well as Dropbox and SurveyMonkey.

[Editor’s note: This post was updated with the closing price and valuation.}